SAP’s $8B Deal To Acquire Qualtrics Comes Just Days After IPO Filing

SAP will acquire Qualtrics International, a developer of experience management or "XM" applications, for $8 billion in cash, the two companies said Sunday evening.

The acquisition comes two days after Qualtrics, filed S-1 documents with the U.S. Securities and Exchange Commission to go public with an IPO carrying a proposed valuation of $4.8 billion. Qualtrics had dual headquarters in Provo, Utah and Seattle.

Qualtrics' "customer experience" survey software is used by businesses to track customer and employee experiences and obtain feedback on products and brands. The company has some 9,000 customers, including about 75 percent of the Fortune 100, according to a Seeking Alpha report on the IPO plans prior to news of the SAP acquisition.

SAP sees the acquisition as an opportunity to combine Qualtrics' customer experience data with operational data generated by SAP's ERP and CRM applications to provide managers and executives with deeper insights about their businesses and "better manage supply chains, networks, employees and core processes," SAP said.

“We continually seek out transformational opportunities – today’s announcement is exactly that," said SAP CEO Bill McDermott in a statement. "Together, SAP and Qualtrics represent a new paradigm, similar to market-making shifts in personal operating systems, smart devices and social networks."

"When you combine our operational data with Qualtrics’ experience data, we will accelerate the XM category with an end-to-end solution with immediate global scale," McDermott said. "The combination of Qualtrics and SAP reaffirms experience management as the groundbreaking new frontier for the technology industry."

SAP is expected to build links between Qualtrics software and some of its own software products, including the C/4HANA suite of CRM applications announced earlier this year. That product set is itself made up of several SAP acquisitions including Callidus Software, the sales performance application developer SAP bought in January for $2.4 billion.

When the acquisition is complete Qualtrics will operate as an entity within SAP's Cloud Business Group. The companies said Qualtrics will maintain its leadership and personnel: Ryan Smith, one of Qualtrics' founders and currently its CEO, will continue to lead the company. It will also maintain it dual headquarters.

"Supported by a global team of over 95,000, SAP will help us scale faster and achieve our mission on a broader stage. This will put the XM Platform everywhere overnight," Smith said in the statement.

Founded in 2002, Qualtrics raised $400 million in three rounds of funding, the latest in April 2017 with Accel and Insight Venture Partners the lead investors, according to the Crunchbase website. The company expects 2018 revenue to exceed $400 million and prior to the acquisition announcement was forecasting a forward growth rate of 40 percent.

Both the SAP and Qualtrics boards have approved the deal, as have Qualtrics' shareholders. The companies expect to complete the acquisition in the first half of 2019.